How to Use a Demat Account app

Discover the Demat account apps for secure, efficient trading and managing your investments on the go with ease.
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How to Use a Demat Account app
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3 min
22-January-2025

A Demat account is fundamental to trading in the financial market. It holds a record of transactions of all the shares that you buy and sell as an investor. While you can easily operate your Demat account through a web portal or Demat account app, a depository participant (DP) is an intermediary in the trade process. They can be banks or financial institutions, which act as brokers facilitating your trade on the stock exchange. When you put in a request to buy or sell, it is then sent to the exchange through these depository participants. Thus, they also have a role in maintaining your Demat account.

In this article, we will explore how to operate a Demat account through Demat account apps, break it down into simple steps, and help you understand the various costs involved in opening and maintaining a Demat account.

How to operate a Demat account?

You can open a Demat account online or through a Demat account app after conducting thorough research. Your research should include information on Demat fees and charges and the reliability of the depository participant, among others. However, Demat accounts do not work in a vacuum. In reality, they are linked with two other accounts to be operational. These include your bank account and a trading account. Let us take a look at both of these one by one.

Also read: What is Demat account

Trading account

Your Demat account is a ‘record’ of the trades. The actual trades take place through a trading account. Thus, a trading account is essential to trade in the market. While you make the trades from your trading account, the records of shares bought and sold are safely stored in your Demat account.

Bank account

It is mandatory to link a bank account to your Demat account as it is the source of funds for your trading activity in the market. This may also be done through your Demat account app. For beginners or small investors in the stock market, a basic service Demat account can be a good choice.

After creating a Demat account, you can easily leverage the Demat account app to manage it seamlessly. Almost all the top brokerage firms provide mobile applications that can be used to open and manage a Demat account and execute trades, access market analysis, and monitor markets, among other features.

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Steps for operating a Demat account

Here are the steps to operate a Demat account, starting from the bank account.

  • Bank account: To start trading, you must first have funds in an operational bank account. Your bank will provide the capital for all shares that you buy and sell.
  • Trading account: A trading account is a specialised account that enables an investor to buy and sell shares in the stock market, as you cannot directly trade in shares from your bank account.
  • Demat account: Your Demat account will primarily record your transactions in the stock market. When you complete a transaction through your trading account, an electronic copy of the trade is saved in your Demat account.
  • Trading: To keep your Demat account active, it is important to conduct trades occasionally. If you go too long without making any transactions, your Demat account may be deemed inactive. With Demat account apps made available by all top brokers, you can easily trade in the market from anywhere.

Also read: Add nominee to Demat account

Costs involved in a Demat account

A major advantage of a Demat account is its low operating costs and the flexibility of managing your trades on the fly through Demat account apps. Common Demat account costs apply to everyone. These include account opening fees, custodian fees, Annual Maintenance Cost (AMC), and transaction fees.

  • Account opening fees: Demat account opening fees are typically minimal or completely waived, depending on the choice of your depository participant. For example, with the Bajaj Broking app, you can open a Demat account for free (for the first year).
  • Custodian fee: This essentially refers to the costs for the safekeeping of your assets. Depository participants may cover these as one-time payments through their Demat account app or levy a monthly fee based on your holdings.
  • Annual Maintenance Cost (AMC): Typically paid in advance, AMCs range from Rs. 300 to Rs. 900 per year, though some depository participants offer quarterly or lifetime payment options. Many brokers also waive off the AMC for the first year.
  • Transaction fees: These are costs incurred when buying or selling shares. The transaction fee varies across brokers, and they may be structured differently. For example, your depository participant may charge a fee on every transaction or a monthly fee based on your trading volume, which can be easily managed through Demat account apps.

Conclusion

Fully leveraging a Demat account app is essential for modern investors, which offers convenience and efficiency in managing trades and transactions. Demat account apps provided by top brokers facilitate seamless trading, market analysis, and fund management on the go. While there are some associated costs, such as account opening fees, custodian fees, annual maintenance charges, and transaction fees, these are generally minimal and can be managed through the app. By staying informed and actively managing your Demat account, you can optimise your investment strategy and achieve success in the financial markets.

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Frequently asked questions

How can I use my Demat account for the first time?
You can open a Demat account by signing up with an investment broker or sub-broker. To access your account for the first time, you need an active internet connection, your client ID or account number, and a transaction password, which you will receive once you successfully create an account.
How can I use my Demat account money?
You can use the money in your Demat account to invest in stocks, bonds, or mutual funds. You can also withdraw these funds by logging into your Demat account and selecting the withdrawal option. After the transaction is authorised, funds are credited to your bank account within two days.